Global commercial real estate (CRE) investment surged 84% in Q4 2020 from the previous quarter, indicating a strong recovery in investor sentiment. Volume for the full year was down by 26% from 2019 despite the Q4 increase.
Cross-border investment fell by 19% from 2019. Germany replaced the U.S. as the top destination for foreign capital in 2020. On the market level, London saw a robust rebound of capital inflow in Q4 and reclaimed its top position as the most desired city for foreign investment.
Global industrial yield continued to compress driven by strong market fundamentals and demand. Office yield stabilized in Q4 as gateway cities slowly recovered and capital remained abundant. But retail yield edged higher with further price adjustment to come.
Investors are more likely to make opportunistic and distressed purchases in 2021 as total returns dropped sharply in 2020. Greater emphasis is placed on tenant credit and rent roll growth under the influence of the pandemic.